Buy Global Health Ltd for the Target Rs. 1,375 By Prabhudas Lilladher Ltd
Quick Pointers:
* Reiterated long-term ARPOB growth guidance of ~5–7% annually
* Expansion plan largely on track; capex guidance at Rs 5bn for FY27E.
MEDANTA’s Q3FY26 EBITDA was largely in line with growth of 9% YoY. MEDANTA’s EBITDA growth over FY24-26E is likely to be moderate at 8% CAGR, due to issues at Lucknow unit and start-up losses related to Noida unit in FY26. It has a total bed capacity of ~3,579 and intends to add ~2,800 beds over the next 4 years. With Lucknow unit issues largely resolved and ramp-up in Noida to be visible from Q2FY27E, EBITDA is expected to clock ~19% CAGR over FY26-28E. Maintain ‘BUY’ rating on MEDANTA with TP of Rs1,375/share, valuing at 27x EV/EBITDA on FY28E.
* In line quarter, Ex Noida EBITDA growth was 9% YoY: MEDANTA reported EBITDA adjusted for ESOPs at Rs2.3bn, down 4% YoY; largely in line with our estimates. Margins declined by 490bps YoY (160bps QoQ) to 20.3%, impacted largely by Rs320mn of losses from new Noida unit, seasonality and higher overheads related to new project addition. Adjusted for Noida unit, EBITDA growth was 9% YoY. There was one time loss of Rs366mn in Q3 related to new labor code. Adj PAT decreased 8% YoY to Rs1.32bn.
*Strong ARPOB; lower occupancy due to new bed additions: Revenue grew 19% YoY to Rs11.2bn vs we estimated at Rs 10.8bn. ARPOB increased 10% YoY to Rs67.4k per day aided by better case mix and reduction in ALOS to 3 days from 3.2 days in Q3FY25. Average occupancy decreased by 460bps YoY to 59%. In Q3, MEDANTA operationalized additional 193 beds across Noida and Patna unit. Occupancy of mature units declined by 200bps YoY to 62%, while that of new units declined by 600bps YoY to 57%. IP volumes were up by 14% YoY; OP volumes improved by 20% YoY.
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SEBI Registration number is INH000000933.
